Squarespace Gets $38M to Compete With WordPress and Six Apart

Updated: Squarespace, a hosted content service that competes with companies such as WordPress (see disclosure below) has closed a $38-million financing round from two leading technology VCs — Accel Partners and Index Ventures — that will give the seven-year-old company a significant warchest and some substantial backing in the battle for digital-publishing market share. Representatives from both venture funds will join Squarespace’s newly created board of directors, along with Jonathan Klein, the founder and CEO of Getty Images.

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This is the first financing round for Squarespace, which has mostly flown under the radar compared with some of its more high-profile competitors. The company was started in 2003 by Anthony Casalena, who was 21 at the time (blog software seems to attract youth: WordPress founder Matt Mullenweg was 19 when he started the company) and has been self-funded until now.

One reason Squarespace doesn’t get as much attention as some of the other blog-hosting and content services could be that it doesn’t offer a free version — the company’s publishing packages, which include hosting and a variety of themes and other services, start at $8 a month and go as high as $50 — and because its user base is made up primarily of companies (including communications firm Porter Novelli and ABC News) and professional entities rather than individual bloggers.

Over the past four or five years, blogging — once the purview of the so-called “pyjama-clad” rogue writer — has become undeniably mainstream. Blog networks compete with traditional newspapers and magazines in a number of content areas including technology, and some — including Sugar Inc., Gawker Media and AOL’s Weblogs Inc — have become major publishing entities in their own right.

Perhaps the best example is the rise of The Huffington Post, which has brought attention not just to blogging but to the idea that a major media entity can be published using the same tools that bloggers use (the site is based on Moveable Type from Six Apart), and that blog software can be a competitor for the expensive and time-consuming content-management systems that are used by many traditional media outlets — some of which use WordPress and other tools to publish their blogs, but few of which have moved to using such tools for their entire websites.

The size of the investment that Squarespace has managed to attract from Accel and Index indicates that these investors see the potential to take the company’s software and services beyond simple blogging and into the broader world of content-management systems. Although some media companies have been experimenting with open-source software such as Drupal and Joomla for web publishing, both of these are fairly complex to manage, and a hosted solution could appeal to publishers such as the Telegraph Group, which is already using a number of cloud-based services.

In addition to WordPress — which raised $29.5 million in 2008 from a range of investors including the New York Times — one of the other big players in the online content-management market is Six Apart, which along with Blogger (founded by Twitter’s Evan Williams and later acquired by Google) was one of the early companies into the blogging race. Six Apart has several platforms such as Moveable Type, TypePad and Vox, and is focused primarily on appealing to corporate clients such as the Major League Baseball Association (the Washington Post and The Economist also use the company’s software).

Update: WordPress founder Matt Mullenweg responded to Squarespace’s funding news on his personal blog, saying the company “has come after our VIP program before, when they made a screencast showing how they could recreate Scoble’s blog in 15 minutes using their design tool.” Mullenweg added that the financing was “quite a chunk of change, so it will be interesting to see what they apply it to.”

Disclosure: Automattic, the maker of WordPress.com, is backed by True Ventures, a venture capital firm that is an investor in the parent company of this blog, Giga Omni Media. Om Malik, founder of Giga Omni Media, is also a venture partner at True.

Could you update your disclosure statement, please? “Automattic, the maker of WordPress” should say “Automattic, the maker of WordPress.com” as we don’t claim to produce the open source software called WordPress ourselves. Thanks Mathew.

Wow! Even granting the “beyond the blog” angle, that still seems like a solid endorsement of the continuing importance of blogs in the face of Twitter and such. A genuine (but also self-serving) question: will someone step up to fix / reinvent blog search? It’s still a pale shadow of what’s possible. (I have lots of ideas … and a nice domain name too.)

Very impressive second round financing, the size of the investment certainly tells a story about the huge potential of this venture. The management tema they have in place certainly has the credentils to make this thing realliy BIG